LSEG Lipper European Fund Industry Review – 2024 and Jan/Feb 2025

European investors may be repositioning, as fund flow trends suggest a cooling appetite for US equities in early 2025. The latest European Fund Industry Review from LSEG Lipper reveals that after a strong start in January, US equity fund inflows slowed significantly in February, with US equity ETFs posting net outflows of €1.44 billion.

These developments build on broader trends from 2024, when assets under management in the European fund industry grew by €1.16 trillion to reach €15.53 trillion. Net inflows totalled €620.2 billion – the second highest in history – driven by record-breaking ETF demand and a continued shift toward fixed income.

Key findings:

• US equity demand softens: While US equity funds attracted €100.3 billion in inflows in 2024, enthusiasm waned in early 2025, with February marking the weakest inflows in months at €914m - well down on January’s €10.9bn. US equity ETFs saw investor pullback, potentially reflecting rising caution amid interest rate uncertainty and geopolitical risks.
• Bonds remain a core allocation: Bond funds saw €295.3 billion in inflows in 2024 and continue to attract capital in early 2025, as investors weigh interest rate trajectories and seek yield stability. Bond funds (+€25.83bn) were the best-selling asset type overall for February 2025.
• ETFs continue to reshape markets: With record 2024 inflows of €256.4 billion, ETFs are set to further challenge both actively and passively managed mutual funds. If this momentum holds, passive investing could become the dominant strategy for equity investing in particular.
• Cash allocations remain elevated: Inflows of €274.4 billion into money market funds in 2024 suggest investors are keeping liquidity on hand, potentially waiting for clearer signals from central banks before making longer-term commitments.
• Sustainable investing in transition: SFDR Article 8-aligned funds attracted €280.4 billion in inflows in 2024, but Article 9 funds saw outflows of €27.8 billion, indicating that ESG investment strategies may be evolving in response to regulatory and market shifts.

Dewi John, Head of Lipper EMEA Research commented, “With US equity demand softening and bond inflows remaining strong, European investors seem to be reassessing risk exposures as they position portfolios for the months ahead. The coming quarters will reveal whether these shifts are temporary or signal a longer-term recalibration in global asset allocation.”

The full reports, including detailed fund flow trends and asset class breakdowns, are available to download below or via LSEG Lipper: https://lipperalpha.refinitiv.com/reports/2025/03/european-fund-flow-2-25/ and European-Fund-Industry-Review-2024.pdf